How The New Tax Plan Will Ruin Your Life If You’re Not Careful

I firmly believe tax policy changes behavior. The higher your taxes go, the BETTER your life becomes! Why? Because at the margin, the less money you keep, the less motivated you’ll be to work. Since the love of money is the root of all evil, the less time you spend chasing money, the happier you will be.

One of my catalysts for leaving work in 2012 was because the finance industry was in a structural decline. We were working longer hours for less pay. At the same time, we faced a progressive tax system where we had to pay a 39.6% Federal tax rate plus a 3.8% Net Investment Income tax plus a 0.9% Medicare tax plus an Alternative Minimum tax plus a 13% State tax plus Social Security tax plus Sales tax plus retroactive State taxes to pay for government overspending. Instead of complaining about paying a 60%+ marginal tax rate, I just negotiated a severance to make no money as a writer.

My life since leaving work has never been better, all because I decided to focus on maximizing freedom instead of maximizing net worth. When you’re in the grind, it’s hard to fathom the benefits of giving up a steady paycheck. But the benefits truly are incredible.

For those of you who naturally like to work more when you can keep more of your money, here are three items from the new tax plan that will ruin your life or your family if you are not careful.

Surprise Items In The Tax Plan That May Ruin Your Life

1) Your 529 plan can now be used for private secondary education. Before, you could only use the proceeds of your 529 plan for tuition at an accredited four-year university. Under the new tax plan, you can now use $10,000 a year towards private grade school tuition.

I’m one of many parents who is still undecided about the wisdom of spending a fortune on private school instead of just having my son go the public school route. With the internet making education and meet-ups free, the value of a private school education has declined. Therefore, it makes little sense to spend record high levels on tuition just because you can afford to.

Once you start spending $10,000 – $60,000 a year on private grade school education, expectations for your kids go way up. When your expectations go way up, a pressure cooker environment may develop that suffocates the joy out of everyone. If your kid is especially sensitive to the plight of others, by going to such an expensive institution, he or she may feel tremendous guilt or pressure to perform. As a consequence, they might logically choose to work in a soul-sucking industry that’s focused on making as much money as possible to pay you back or provide the highest ROI, instead of choosing an industry that’s focused on helping those most in need.

The new usage rules for the 529 plan may tip the scale in favor of sending your child to a private grade school. It’s one of those 20% off coupons that can end up costing you a fortune. What the new tax plan should have done was provide a deduction if you send your child to public school instead. The more parents focus on the public school system, the stronger it will become given there will be more involvement and more funding.

Doesn’t having your child learn the same material at public school, while saving $300,000 – $500,000 in private grade school fees and avoiding the stress of high expectations, sound wonderful? Not if the new 529 plan rules can help it.

2) Miserable high income earners in expensive cities become even more miserable. I know I’ve done a poor job of highlighting the plight of HENRYs (high earners, not rich yet) living in expensive cities like San Francisco or New York, but that doesn’t change the fact that so many of these well-educated, 50+ hour a week, highly taxed, stressed out of their mind individuals are miserable. They see no end in sight to their grind because they don’t build passive income and don’t work on a side business to give them an eventual escape outlet.

By capping state income and propery tax deductions at $10,000, residents living in high state tax and high property price cities are getting an uppercut to the chin. The annual property tax bill for a $1.5M median priced home in San Francisco is ~$19,300 a year. Add on $16,000 a year in average state and local income taxes paid, and you’re at $35,300. Your tax bill could easily be $5,000 more as a result.

Meanwhile the capping of mortgage interest deduction on a new mortgage amount of $750,000 means about $10,000 less in mortgage interest deductions in the first year of amortization. You can now add on another $2,000 to your tax bill.

One of the reasons why I sold my rental house, which I’d owned since 2005, is because of its onerous $23,000 annual property tax liability. Yes, it can still be deducted as an expense for landlords, but the new deduction limit for new homes will have a negative knock on effect on property values. I anticipated some type of detrimental tax law to pass given San Francisco is a sanctuary city in a blue state. But I just expected some type of reduction in the mortgage interest tax deductibility. To add the $10,000 SALT cap is a hugenegative surprise. Further, the $10,000 cap is for married couples, while two singles get $10,000 each.

This new tax law may be the tipping point that causes a consistent net migration out of expensive coastal cities and into no state tax states or states that have a much lower cost of living. Coastal cities have turned into one big grind. Traffic is horrendous. Home prices are unaffordable. The cities are turning economically homogeneous. Even moving to the western part of San Francisco has not allowed me to escape the tentacles of the tech industry. My only next step is to move to Hawaii and deploying my BURL real estate strategy of investing in the heartland.

3) Estate tax threshold rises to $11 million for individuals and $22 million for couples. The easiest lifetime net worth target to shoot for is the estate tax threshold because nobody in their right mind would keep anymore due to the 40% death tax. When it was $5.49M per individual, it provided a high enough goal for most people to shoot for without feeling too discouraged that it was an impossible dream. While most people never accumulate $5.49M, they do get to a level where they can comfortably leave all their assets to their heirs tax free.

Now imagine you are one of those people who believes they’ll reach that $5.49M threshold before the age of 100 thanks to inflation, investment returns, diligent savings, and good financial planning. You are on cruise control gliding towards your goal of leaving a significant tax free estate to your heirs. Now, suddenly, you’ve been incentivized to figure out a way to work longer, harder, and take more investment risk to save $2.2 million in estate taxes ($5.51M X 40%) and get to the $11M target.

Of course any reasonably motivated person can’t help but gravitate towards killing themselves for more money. Further, there’s a good chance the estate tax threshold might change again in the future, thereby wasting all your time trying to get to a $11M net worth!

What many of you will now logically do is input some figures in a compound interest calculator and see what it will take to get to $11 million. Below is a realistic assumption I’ve provided where your $100,000 grows to $11,467,826 in 50 years if you earn a 6.5% annual rate of return and save $25,000 a year. Time to get to work, forever!

BONUS:The higher AMT threshold makes you no longer satisfied with making top 5% money. $200,000 is the ideal amount for maximum happiness for an individual because it’s not subject to as many deduction phaseouts and the AMT. In 2015, more than 10.3 million households had to calculate their AMT liability. The effective tax rate on $200,000 is also reasonable at ~20%.

Now that the income phaseout threshold for the AMT has risen from $120,700 / $160,900 for singles / couples to $500,000 / $1,000,000 until December 31, 2025, it’s only natural to try and make up to these limits. And generally, to make $500,000 / $1,000,000, you’ll either have to move to a big, expensive, congested city or work 80+ hours a week for at least five years building a business to give yourself a chance.

The Only People Who Won’t Be Miserable

The only people who won’t be miserable under the new tax plan are those who are alreadyrich. These are the people who are getting the most money back for just existing, even though they need the money the least.

As a result, the tax plan will make millions of regular income earners miserable due to the envy they have for those who already have the most. Even though the tax plan provides tax savings to the middle class and lower middle class, it doesn’t feel right when some others get so much more.

I feel sorry for those people who decide they are now going to ruin their lives to earn more money they don’t need due to lower taxes. I wish everybody does start earning $500K per year and accumulates $11M per person in assets just to see that money doesn’t improve happiness. Once you earn enough money to comfortably provide for your family (~$100K a year in non-coastal cities, ~$250K a year in coastal cities), happiness is dictated more by health, family, and friends.

Readers, do you forecast your behavior changing under the new tax plan? Are you more motivated than ever to chance money that doesn’t do anything for your well-being? What are some other surprises in the new tax plan that may affect behavior? Subscribe to the FS iTunes channel to listen on your mobile device on your way to the grind!

Author Bio: Sam started Financial Samurai in 2009 to help people achieve financial freedom sooner, rather than later. He spent 13 years working in investment banking, earned his MBA from UC Berkeley, and retired at age 34 in San Francisco.

Sam’s favorite free financial tool he’s been using since 2012 to manage his net worth is Personal Capital. Every month, Sam runs his investments through their free Retirement Planner and Investment Checkup tool to make sure he stays financially free, forever. It’s free and easy to use.

For investing opportunities in 2019, Sam is most interested in investing in the heartland of America through real estate crowdfunding. Property valuations are much cheaper and net rental yields are much higher. There is a demographic trend towards moving away from higher cost areas of the country to lower cost areas thanks to technology.

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Comments

It will be interesting to see who shakes out as the winners and losers of this tax plan years from now. Right now it’s clearly favored towards big business but it will be interesting to see how others adjust to the new tax code. Personally, I’d like to see a flat tax on what you buy and if you make under a certain amount you get refunded a certain amount each year when you file your taxes. That way people can feel the tax when they are purchasing things and know whether or not it’s really worth it.

2 family members live in new hampshire. no income tax there. their property taxes are half that of massachusetts. my parents live in florida. again no state income tax and they pay lower property taxes. youve been lied to lol socialists cant afford socialism lol then they complain about the costs

Good summary Sam. I would love to hear your thoughts on whether or not the tax plan will do wonders for the economy like we are being told? If so, does this make you more bullish on heartland real estate?

I’m a high income earner in an expensive coastal city. After crunching the numbers, for various scenarios, the SALT cap is more or less offset by the lower overall tax rates. The biggest effect was actually caused by the changes to AMT, which essentially completely removes it for almost everyone with mainly earned income.

Do you own property or just pay the state income tax? If you have both I don’t see how the lower rates offset losing $50k+ in deductions. Without the changes to AMT this bill has my tax bill increasing by 4 or 5 figures. I’m not convinced the new AMT changes will be that big. They moved up the phaseout threshold to over $1M yes but you’re still subject to the tax and with AMT at 26% compared to the dramatically lowered regular brackets I bet more people will pay AMT than currently expect it.

AMT exemption amount going from 55400/86200 to 70300/109400 pretty much pushes almost everyone out of having to hit by AMT. This tax bill is a very large tax cut for people in the $400K region that were being hit hard by AMT.

In many ways you are right. But that analysis in the link is the Senate plan. The conference plan that got passed also moved the AMT exemption phase out to 500K/1000K whereas the Senate plan it was 208400/156300. I believe (without going deep into the math) that this moving up the AMT exemption amount AND a massive increase in the AMT exemption phaseout pretty much removes almost everyone from AMT. I agree that under the Senate plan, like what the link indicates, what took place was the income levels that will get hit by AMT are shifted up.

Nice post, Sam. I was anticipating you posting about the tax plan this morning (I was right!). Although, numerous others are doing the same (including me :), so the odds were favorable.

On your questions, I went more in into detail on a post but in the context of your main points here:

– (1) Our behavior will change slightly. We’ll now be comfortably within the 24% bracket (married file jointly). I don’t envision us earning more than a combined $315,000 (and we have plenty of room to grow into that), so earning more via W2 income will be important but not an “all-in” goal or need.

– (2) Regardless of the recent reform, I am more motivated than ever to continue to earn more and create passive income. Not for the sake of building a pile of cash, but for some of the same reasons you’ve mentioned. My dad will be 66 in June when he retires (he has a partial pension, plenty of savings/investments, a paid-off house, no debt); he’s enjoyed the ride along the way but he’s showed me some of the same themes. Everyone has a unique sweet spot with income, time, effort, etc. that all impact happiness.

– (3) The roughly doubling of the standard deduction. I believe (and hope) a lot of folks will continue to donate and contribute to causes they about.

Overall:
– It’s important to consider taxes, as they can potentially impact your returns and earning power the most. But I would not put them at the forefront of the decision making process.

– We try to consider our objectives first; we then evaluate the tax implications and decide where to go next.

I actually don’t expect any changes. We are very good about ramping up our savings every year and our tax returns go to paying down our mortgage and maxing out Roths.
We are only putting in $80 per month into each of the kid’s 529s so there isn’t much in there to pull out for private school. I’m a firm believer that most private schools are just overpriced regular schools that don’t have an extra benefit. I’m sure there are actually incredibly amazing private schools out there but they aren’t by us and if they were they would be out of our price range.
I’m sure it will be a few years before we know the true effects of the new bill on our household but until then it is business as usual.

Sam, unless something changes, our decision to stay independent after my retirement from the military was absolutely correct. We are happier than ever and have already landed a couple of lines of additional income through our consulting business, with my military retirement income providing for the essentials of our moderate-cost lifestyle.

Maybe it’s just me being a midwest guy that’s watched our population decline and income stagnate compared to other areas, but I don’t feel bad for people that complain that they’re not getting a benefit because of how expensive it is to live there. They’ve probably gotten much higher salary increases over the years. Those who bought real estate probably saw much higher appreciation levels.

And honestly, are they surprised that the Republicans wouldn’t really look out for them when many of the coastal states are firmly Democratic leaning? In a sense, the Republicans that crafted and passed this bill are looking out for those that put them in the position to do so.

I’ve written an article that I really don’t support this tax reform at all, but my position is that I don’t like it from the position of the overall economy. But I’m not in line with the people who don’t support it solely because it doesn’t help them personally, when many have been helped along the way in many other ways.

@Money Beagle, one of the things that you — along with everyone else who espouses the “blue state/blue city dwellers don’t *have* to live in blue states/blue cities” argument — neglect to consider is that for many people, cleaving to such locales is as much a question of personal safety, comfort, and freedom of expression as it is a question of mere elective choice.

For example, the notion that people of color or LGBTQ folks (especially LGBTQ folks who are married) can be assured that they and their families would be safe, comfortable, and free to be themselves in, say, a low-cost-of-living small town in a rural region of a deep red state is an ahistorical assumption that is disingenuous at best and intellectually dishonest at worst.

When marriage equality became the law, the rogue county clerks who refused to grant LGBTQ couples marriage licenses were concentrated not in blue states/blue cities, but instead in smaller towns in red states where many locals happily supported the rogue clerks’ actions. Similarly, the parents, grandparents, and great-grandparents of African Americans like me who fueled the cycles of “Great Migration” from southern states to northern and mid-western states during the 20th century did so because of the serious, sustained threat that portions of red states had long posed to their and their families’ personal safety and freedom to be.

Are blue states/blue cities often the province of wealthier folk who could live anywhere in the U.S. but choose blue states/blue cities simply because they dig them? Yes. But huge swaths of blue regions’ historic populations have flocked to these locales for a far more complicated — and far more serious — set of reasons than your post considers.

Although I went to school in the South, and enjoyed my time in Williamsburg, VA I would rather live in SF or NYC bc of the overwhelming acceptance of people of all types. I never worry about discrimination anymore, when I was constantly slighted in HS and college.

I do love the southern hospitality and culture though. My experience was great for the most part.

I respectfully call BS on this. I’m a foreign-born US citizen (Hispanic). I’ve been in Hi-Tech for decades and still have an accent. I’m in a low-cost state (AZ). Never, ever have I felt disrespected, nor discriminated in my personal life or work-life.

People do to you, what you allow them to. Animals and people smell fear.

JP AZ, Just because you have not experienced any discrimination does not mean it does not exist. Dayle was spot on with this comment. Your statement, “People do to you, what you allow them to…” is a BS statement, with all due respect. People do what they want. The south has a culture that is slowly changing over the last several decades, but don’t be fooled. Racism is alive and well here. This is coming from a Healthcare Executive who happens to be a minority who has also lived in the deep RED south her entire life.

The larger cities in the south (and even medium sized ones) really don’t have those kinds of issues. Even cities like Charlotte which used to be extremely conservative 20, 30 years ago are now fairly liberal (the whole HB2 thing started because Charlotte was forcing firms to let anyone use any bathroom and the Mayor is extremely liberal). Plus, you can live just over the state border (10m commute) and pay less than $2,500/yr on a 4k sq ft brand new home you bought for $400k. Same thing with ATL, south Florida, the larger cities in TX. You can still live in a red state and have nearly universal acceptance. Just stay away from the po-dunk towns of 5,000 people. Most people in the South do anyway.

Very spot on! I live in a very red state, but very liberal city and I enjoy a low cost of living for now(home prices are on the rise), high salary, and diverse population. Occasionally I am required to travel for work to very dense populated rural areas and I will say it is nerve racking. Most people I meet are professional and friendly but there are some areas its safer to avoid.

Interesting point, but what you have to consider is that those statistics for black on black crime is more than likely centered in impoverished areas. Intellectual and high earning black people are living in nice areas, even predominately black neighborhoods where crime is low. Poverty, drugs, employment, and low performing schools are the common denominator. Not the color of someone’s skin. Try looking at statistics on white on white crime, or hispanic on hispanic crime You will see the same correlation.

If you’ve never looked at the data before the main takeaways are most murders, regardless of your race, are done by someone of the same race, and per capita blacks commit the most murder considering there is almost 6 whites per 1 black in this country and blacks commit more murder.

While the stats may be true (I’ll need to verify), poverty, lack of education, systemic racism plays a part in this. Of course black murders per capita are high. Any race that has experienced the systemic racism that black Americans would be affected on a generational level. I don’t expect for anyone to understand the significance of this unless you specifically sought out to understand the correlation. There are generations of families who are still reaping the punishments inflicted upon them since slavery, Jim Crow, segregation, etc… My great great grandfather was murdered, hung in front of his family simply because his skin was dark, he owned his own farm/land, and was a business owner. Until we can confront the horrific truth of our past and have a honest discussion people will continue to blindly throw out these statistics without understanding the root in this. Black people as a whole also need to face this past and use it to propel them to succeeds. We aren’t without responsibility here. Black people have work to do to.

I dunno — I know lot of people in blue states very afraid to be outted as a Trump supporter for fear they would be stoned or fired. Maybe not the former, but definitely the latter. I don’t think the coasts are as ‘tolerant’ and ‘accepting’ as you think. They are accepting of very specific types, but you certainly are not free to be as you are if you don’t fit the general culture.

These are all great points. Makes me rethink living I’m California. In some ways my home burning in the recent fire has given me options. For one, I don’t have to keep my 1 million dollar mortgage if I don’t want. The effects these tax changes will have will be interesting. I suspect there will be ripples in housing for sure.

On the private versus public school debate I would go with public education. Over the last 3 years we have gradually removed our 3 children from a very expensive private school with the last one will be out in May. On top of saving $45,000+ per year our children our happier more well rounded people. Private school shelters your children too much in my opinion from the real world.

On the 529 to private schools I really don’t see how that is going to be a huge tax help unless you have rich relatives who want to give money to your children. Give the accountants and tax advisor’s a couple of years, and they will figure out how to take advantage of the change in the law.

“Regardless of your age, you can set up a Section 529 plan for yourself to fund educational expenses now or in the future.

You can use the money in a 529 plan to upgrade your skills by just taking a few classes at a qualified college or trade school, or working towards a degree or advanced certificate. You can apply the funds for tuition, books, fees and even a computer, as long as it is used to further your studies.

Even if your plans fall apart, and you use the money for your own educational expenses, you can always change the beneficiary on your account to a child, grandchild or another relative without paying any tax on the transfer.

Although your contributions are not deductible on your federal tax return, your investment grows tax-deferred, and all money that comes out of the fund for your educational expenses is tax-free upon withdrawal. What’s more, many states give upfront state tax deductions for 529 plan contributions.”

The thing is, If you know you want to get more education next year, you probably won’t benefit a lot from the 529 plan bc it may not be enough time for the market to appreciate to make it beneficial. Further, Your investments could decline, making just paying for your education through savings better.

Taxing tuition waivers could have a couple positive effects:
1. It stops incentivizing an overproduction of PhDs leading to poor job prospects, high debt loads, and high opportunity costs.
2. Since many or most PhD students are funded off of grants from the government and tuition is one of the few “overhead” items Universities can charge to these grants, making tuition taxable removes a costless mechanism for Universities to funnel money that could go to more research into administrative overhead.
3. Finally, in-kind income is supposed to be taxed in most instances, so removing the loophole means tuition waivers are treated like other forms of in-kind income which is an equity issue.

Unfortunately, it’s a moot point, because that clause was removed from the final bill so tuition waivers are still tax-free.

Interesting that you would suggest a tax deduction for sending kids to public school. It would make sense to give a tax credit for using private school or having no kids at all, since that would reduce the burden on the public school system. If you aren’t using a resource, don’t pay for it.

I’ve always found it strange that there is a tax credit for having children. The people having the most kids are the people least able to afford them. So I don’t know why we are encouring people to have more children.

Children cost the tax payer, in terms of public school and other things. It would make more sense to levy an extra tax for each child, to encourage people to not have children unless they can afford them.

It looks like the new tax plan will allow us to retire a few months earlier as long as we redirect the benefits toward our net worth. I need to run the numbers on my post retirement income and see how much we benefit, and if that also changes the date. Also, being a low income/low expense family, the changes don’t motivate us to give up happiness in exchange for increasing income/wealth building.

I don’t think we’ll change much. The SALT cap is okay for us because we’re right under $10,000. I’m pretty sure, but need to run the numbers for 2017. 2016 for sure.
529, not a big deal for us either. Our kid is going to a good public school.
The big change for us would be the pass through thing. I need to figure it out in 2 weeks. Do I need to change something with the IRS? Currently, my business income is taxed at the individual rate. Probably need to get an accountant next year.

Hey Sam, do you think the new tax plan will have much effect on those of us who are paying AMT every year? I live in CA and pay 30k a year to CA. I also pay AMT every year. My understanding is that when I pay AMT, it removes SALT deductions in the AMT calculation. So I’m thinking my taxes might not go up from this?

We overlook something very important here too- California has not conformed to many Federal tax changes in the last decade

It is possible we (Californians even though I am not one currently) will have to plan for two completely different tax strategies. CA could recognize some Additional SALT deductions on page 540CA. All remains to be seen.

I concur with Mbb_boy. With the increased AMT income phase-out threshold to $1m for married filing jointly, the vast majority of high-income W2 earners subject to AMT taxes in California will still be better off under the new tax plan, despite the loss of SALT deductions.

Very interesting perspective. I don’t believe I have seen these points brought up on the topic.

On your point 1, it seems odd to argue against giving the parents more freedom to choose how they spend their money. I personally would much rather have more control of where my money goes as opposed to the government. Odd that you feel different?

Point 2, no question high income earners in cities that allow you to deduct your state tax are getting screwed under this tax plan.

Point 3, the plan will phase out the death tax in six years so there will be no limit soon. So that would eliminate people chasing 5.5 or 11 million dollars of net worth.

According to Brookings Institute just over 80% of Americans will benefit from this tax plan. That sounds like a big win for Americans. Just because some people win more than others shouldn’t really matter. If my life is getting better than I’m happy. Just because Bill Gates might benefit more from this plan (not sure if he does) than me doesn’t cause me to be jealous or envious of him.

Not trying to be combative I have just found it interesting to see so much push back on this plan when so many people are going to benefit from it.

Personally I would like to see us go to a flat tax. Not sure how you feel about that kind of system?

I guess the main reason I can’t agree with you that “so many people are going to benefit from it” is that we are looting our kid’s future to the tune of > 1 trillion dollars in new deficit spending (and that is after “dynamic scoring”), just so we can get a few bucks ourselves. And that is leaving aside the question of which income groups actually benefit the most from this.

I have substantial wealth, but not enough that I can allocate my own resources for some of the things I want — like an appropriate education for every child. That’s why I want to pay my taxes to the government, to provide for the common good.

McSweeneys has a humor piece on what different people will do with their tax decrease, ranging from the guy who will buy a pair of warm son to the guy who won’t notice the hundred thousand because he already makes three million.

Did you know that you can provide the government extra money? I personally think the government sucks at just about everything but for everyone out there in favor of higher taxes, you can choose to pay more.

Given your belief in a flat tax system, you might not realize it but you must be a socialist (and I don’t use this word in a facetious manner)! Flat tax systems only work when the discrepancy between the highest and lowest income earners is minimized, no one has an advantage over anyone else. In the real world that we live in, the income inequality spectrum that currently exists in the United States would not only get worse but spiral out of control. We can’t let this happen.

And in the spirit of this post, it seems that Sam would actually argue for an even MORE progressive tax system. Low taxes at the bottom and very high taxes at the top. The marginal utility of money decrease the more one acquires, we should be building a system that encourages more opportunity for more wealth among the most amount of people. It’s not jealousy or envy that Bill Gates may make more from this tax plan, it’s that there is zero reason why someone with that much wealth needs more from an economic perspective.

I will admit that I haven’t spent an enormous amount of time studying taxes but I have never once heard of support for a flat tax is synonymous with being socialist.

I like the flat tax because..

1. It greatly simplifies the current tax code. Currently 75,000 pages.

2. That simplification of the tax code dramatically cuts down on cost

3. It motivates people to work harder. It is less motivating to put in the overtime when the government is just going to take more of it.

4. More fair to the middle class. The rich are very good at hiding their money in offshore accounts and tax advantaged accounts. Your everyday worker doesn’t have the knowledge or the resources. This is why you hear things like Warren Buffet paying a lower percentage of taxes than his secretary.

Moving on, I don’t care about income inequality. Like I said as long as my life and the majority of the country is doing better I couldn’t care less about income inequality. People scream about this widening gap between the rich and the poor yet as a whole everyone is doing better than they ever have been. Poor 70 years ago meant hungry and struggling to survive now poor means multiple TVs, high speed internet and a car.

It actually sounds like Sam would be in favor of copying some of the European countries and raising taxes for everyone.

One of the two purposes of the tax code is : moral suasion. It is supposed to change behavior. I’m not surprised CA got fiscally smacked and will continue to be smacked as long as they’re so in your face about all things sanctuary.

In March I was lamenting selling my primary residence in so cal, bc I was missed out an unexpected rapidly appreciating real estate market? I am self employed and had employees and that was part of my decision as well as escalating high property taxes supporting the Palos Verdes school district long after my child graduated. Today I’m not feeling so badly. I thought taxes would be punitive under a democratic win and here they turn to be so.

I didn’t hit AMT bc I was not a W2 emp but was nailed for every stupid thing the city of Los Angeles implemented like the Gross Receipts tax on business.

I’m currently in a state with 4.5 percent top rate state tax and 1/2 percent prop taxes. CA will get my capital gains tax on the sale of my primary res

My plan is to buy in a state w no income tax like Florida where cost of living is much lower. Do you think we will see a bigger migration from NY, NJ, Connecticut due to those changes?

How do you think housing prices in CA will be effected esp in large cities like SF and LA

Has a southern California real estate market done really well since March 2017? It feels like the San Francisco real estate market has flatlined since the summer. What did you end up doing with the house sale proceeds and what was your percentage appreciation? When did you buy this house?

Hi. I stopped looking at CA real estate prices around then as it was too depressing but I heard the run up had slowed I more than doubled my money on my PV house but I was ther since 2002.

I invested the amount of net proceeds I’d need to make a good cash offer in short term stable net asset value vehicles that pay about 4 percent. I thought I’d find a place asap but inventory is low where I am looking. The return is Nothing to write home about but it will be there when I make my offer.

Once I purchase I will re-fi, probably 10 year interest only, get my cash out and invest. Due to age, i’m slightly less risk tolerant but I am diversified over most asset classes being overweighted in international and developing markets all this year. I still like reits.

I hope to live in Florida Tried the more midwestern option last year Colorado but could not handle being landlocked and it’s not cheap here either.

Have you seen any effects on CA real estate due to SALT taxes ? Can’t wait to see if the FTB imposes its own version of AMT. it’s definitely possible.

Sam-As usual great post! Can you tell me the effect of housing prices in the Bay Area with the new plan. I was planning to buy in the $2.7~$3M range. With running the new numbers, I do not see any tax advantage of owning a home. Already have a $800k mortgage on my existing home. What is your opinion on Bay Area housing specific to the new tax plan?

I am jealous that you are in the position to do this. I think if you are not bringing in a big income and already have your stash saved up you would be wise to take advantage. Still have time before I am worried about getting that pretax piece out of a retirement plan.

Can you elaborate more or send me to resources for this because I never really understood the backdoor conversion and the new tax bill has recharacterization of treatment of pension plans. still confused. I have a couple of 401Ks i want to convert to roth ira. thanks

You and smileifyoudare are exactly right. The love of money actually supports the argument even more why saving money on taxes might make people more miserable due to their continued pursuit of money.

The whole point of this article was to make people beware of the unnecessary pursuit of more money you don’t need in an industry you don’t enjoy for the elusive belief Money will provide more happiness and fulfillment.

The happiest people in the world are in Europe where they have the highest taxes in the world.

“…The happiest people in the world are in Europe where they have the highest taxes in the world…”
How does one define happiness? How does one measure it?
The marginal utility of money will certainly diminish afters a certain income, but saying that money is the root of evil and does not bring happiness (whatever that is) seems unreasonable.
I think there is a time to make money and a time to detach yourself from it. Dont confuse detachment with renouncment. Only people who have money can practice detachment. People without money saying money is not important are stuck in a form of renouncement and any morality thereof is not sincere.

My wife and I went to Europe for three weeks in a row for three years on business to do research on how the happiest people in the world live. There is a remarkable difference in calmness and anxiety and attitude there compared to in the United States. Folks in Europe literally walk slower, drive slower, speak slowe my wife and I went to Europe for three weeks in a row for three years on business to do research on how the happiest people in the world live. There is a remarkable difference in calmness and anxiety and attitude there compared to in the United States. Folks in Europe literally walk slower, drive slower, and spend more time outside eating with friends. It’s an amazing life.

I checked out the link, it doesnt say anything about how you define happiness. I cant believe you throw in Russia with a bunch of Western countries as an example of happiness. Most of the people in Russia still live in the dark ages gathering mushrooms in the forest to make ends meet. Take away Moscow and St Peter and the rest of the Russia is beyond third world country, on survival mode.
As for the virtues of EU governments, I suggest you spend more time in EU countries, or try to work and live there before coming to such conclusions.
It is hard to argue with Friedman’s efficent use of money below. Why do you think the government know better that you what is good for you?

“There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then, I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government. And that’s close to 40% of our national income.” M. Friedman.

I grew up in France, worked for 6 years in Belgium, 1 year in Netherlands, 2 in Germany, 3 in Russia, 1 in India and 2 years in China. Countries were I spent one to 3 months are too many to list here. I would say I speak fluently 4 languages, but that is not a sign of intelligence imho. It matters what you have to say not in how many languages you can say it.
But this doesnt make me an expert on European affairs, there are amazing things in Europe like nowhere else, taxes and big government are not one of them, it is my opinion.
Granted, its not easy to write about such difficult subjects as money and happiness. What you prescribe (in a nutshell, less money will make you happy) seems disingenious at best. That choice is available to anyone, give your money to someone who wants to be miserable and free yourself from the materialistic pains of want and desire.
We have our well-to-do people in this country like Buffet that complain we are not paying enough taxes. They had so many of similar millionaire guys in Norway doing the same thing. However, their government did some very unusual thing, it open a “Voluntary Tax Account” for whoever thought was not paying enough taxes to contribute to it. After one year the amount of voluntary contribution was at $1,325! Merchants of virtue run the streets everywhere nowdays. So, Merry Christmass and remember each other in your prayers. It is the highest expression of our humanity, in addition to selfless acts of charity.https://www.bloomberg.com/news/articles/2017-07-06/-voluntary-tax-plan-as-expected-fails-miserably-in-norway

Great post, Sam! I agree that Europeans appear happier. But I have also had conversations with friends who immigrated to the United States from places like France who say that they came to the U.S. for a better opportunity to make money and gain wealth. These friends say Europe has more of a “ceiling” if you’re not part of the elite class while they have the perception that you can make riches in the U.S. no matter who you are. I guess some people what to have the opportunity to be part of the grind :)

“Doesn’t having your child learn the same material at public school ….”

True, they may learn the same material, but often in a completely different environment. I started my child in a school with 30 children per class and a low teacher:student ratio, and he got lost in the crowd, wasn’t receiving the attention he needed, and didn’t enjoy school. Transferred him to a private school with 12 children per class, much better teacher:student ratio, much quieter learning environment, much healthier environment overall, and now he is thriving and LOVES learning.

Plus, it’s not just learning the material; it’s learning how to learn, how to think, reason, synthesize information, etc.

I believe your child is still young Sam so you may not see this yet, but all children are different and they all thrive in different environments. If I can put my child in his ideal learning environment for 10K a year, that’s a no brainer and the best 10K I’ve ever spent. But maybe the public schools by you are much better than mine. Food for thought …

Scott, you are exactly right. Each child is different and education is truly one of the best “gifts“ we can give our children.

Each child is different, and no child wants to make their child a social experiment and risk not giving them the best. We just need to look at what the end result might be for all this education in time we spend.

There are also many of us that did great at public school like me, my wife and three kids. All of my kids tutored private school grads in college and all are self sufficient now living in their own homes and not in my basement. They all also had completely free ride university degrees including housing in spite of my high income. And I’m kind of a fan of the new tax plan since with my low six figure part time retirement side gigs it looks like I’ll get a 5-6k decrease in taxes! I’m in a Red flyover rural state with low taxes and that looks like the place to be under this plan.

Probably because half the country lives in the coastal cities. And in order to stay in power, you need to throw some bones to have the voting population.

Everything is Yin Yang in politics as well.

These deductions also might be a way for amending federal income tax rates that do not adjust for the cost of living around the country eg A 25% federal income tax on someone living in New York City is more onerous a 25% federal income tax on someone living in Des Moines.

I’m not quite getting the last part of your statement. It seems like you’re implying that 25% is too high for NY…so why would NY add to their misery by giving them even MORE taxes?

Even with the SALT deduction, you pay more in taxes in NY than you would in Des Moines. If a 25% is too onerous for people in NY, California etc….then how are they better off with high state taxes + SALT, when they end up paying more? Just have lower state taxes to remove the burden……at which point there is no “need” for SALT.

I’m not certain it is always a question of low tax areas being able to better manage their budgets than higher tax areas. Often (not always) higher taxes translate into more services and better quality of life.

In addition, the high SALT states tend also to contribute more to federal taxes than they use, compared with low SALT states.

I think both these reasons justify to a reasonable extent why SALT deductions are reasonable.

In the short run, we are absolute winners. My wife’s business can now be labeled a pass through and she gets the lower bracket. This is only good for certain businesses that make less than 315K a year. She is the expert in this field, not me. I trust her. CPA and MS in Taxation with 25 years experience. We will save about $10K that way and another $5K on the new brackets.

Down the road the unintended benefits could make things worse. That is an unknown.

As for Public versus Private College, I have done a ton of research on this issue since I have a daughter who is a senior in high school and another who is a freshman. The difference between public and private is NOT as steep as the sticker prices suggest. The vast majority of private colleges offer tuition discounting to affluent students in the form of merit scholarships. Almost no one pays the full price. Further the costs for public schools has been increasing more and more. Penn State ( I am in PA) is now 33K a year all in. A couple of out of state schools my daughter is interested in will probably cost between 38-42K after discounting. So, it is not a simple equation.

The type of business only matters if you go over $315k as a married couple! This is going to be a huge deal for anyone with side income/business/etc and yea you’ll save about $4.5k for every $100k in net biz profit!

The tax plan is going to be interesting. While it clearly will hurt Californians (which I am), I wouldn’t be surprised to see what you mentioned which is the migration of people to other low SALT states. Surprisingly, from a political standpoint, this would be migrating more liberals and independents from heavy blue states to some borderline red states where they will plant roots. This could skew the political landscape to blue in the long term. While the GOP may have been thinking they were giving the middle finger to blue states, this could really be a plausible outcome.

Janitors, teachers and waiters aren’t moving due to the heavy burden of not being able to deduct SALT. High earners generally in the private sector MAY move but I doubt it will be dramatic. I think a good majority would be fiscally conservative. What you describe might happen but I think it’s not likely. Will probably make blue states bluer and red states a deeper red.

Had the same thought. It could tip NV to solid blue and AZ to lean blue over the next 4 years or so. That may be happening anyway but what about TX? People I know are surprised to hear this. Trump won by 9%, Romney by 16%. Not sure if you can even count Bush since he is from Texas. The map could be shifting for both parties (more red in rust belt and more blue in SW USA). Interesting to see how it all plays out.

Do agree that there will be an exodus of rich, FIRE or HENRY crowds from CA, NY, etc to states with no state income taxes. CA state income taxes are already outrageously high even with the state income tax deductions on the federal income tax returns. Taking away the SALT deductions will serve as a tipping point. I for one will leave CA upon retirement.

I completely agree with you and have the exact same plans to leave Oregon for the same reasons. Boarder cities (PORTLAND) from high to low/no tax states will lose high state income tax payers due to the SALT removal. It is a tipping point.

I really want to dislike the tax changes as a bleeding heart libertarian who thinks this is just the first step in making life harder ultimately for the middle class and the working poor since it will raise insurance rates, they’ve already signaled they want to cut Medicare and Social Security and the tax cuts are only temporary except for businesses, but I really can’t help but like it personally.

Economists have been saying for years that the mortgage interest tax deduction is a subsidy for homeowners that doesn’t really help the middle class and our current corporate tax rate isn’t competitive or fair.

For me personally as a software developer, whenever it’s convenient for me, I’ll easily be able to shelter some of my income by incorporating and taking advantage of the lower tax rate and the other changes are pretty much a wash. I don’t live in a high tax state.

Just for a little perspective only 1.5% of homes sold in America will be affected by the new mortgage deduction.

As far as chasing the extra buck. I am DEFINITELY one of the people who will be! For the first time in years I feel business owners are given a golden opportunity to thrive, excel, and create. Yes, I will be putting some of this windfall in my pocket, but I also see it as a great opportunity to enhance my employees lives as well. Many of my friends are small business owners and the sense of optimism we all have is something we have never felt before. We want to pay our employees more, we want to buy new equipment, we want our country to thrive and we now feel we have the opportunity to do something about it.

The SALT deduction cap should have no impact on a rental property, the taxes for which are deductible as a business expense. Or am I missing something?

Also, plenty of people (I read about 40% of itemizers) already “lose” their SALT deduction through the AMT.

Finally, 96% of the tax increases stemming from the SALT cap will be paid by people earning $150,000 or more per year (and +50% will be paid by the top 1% of earners). The cognitive dissonance of Progressives bellyaching about the SALT cap is both funny and sad.

You aren’t missing anything. You have to think one step further, and think about the knock on effects. Prices are affected by demand on the margin. And I expect new demand to go down while supply is going up.

Sad. This post is shite, Sam. I’ve always come on to your site to learn, not to read your political opinions.

Right off the bat… you say “The higher your taxes go, the BETTER your life becomes!” and then follow that up with “One of my catalysts for leaving work… We were working longer hours for less pay. At the same time, we faced a progressive tax system…” Those are so beyond contradictory, you can see the clear bias right from the beginning. You have hard working Americans who SHOULD see bigger paychecks from this legislation, but you multi-millionaires on the coasts bitch because your property tax deductions are being taken away.

Do you simply forget what it’s like to have to wake up and work 50+ hours a week just to make ends meet?

Thanks Kevin! Not sure how you can’t understand the logic that higher taxes = better life and leaving work because of higher taxes = better life because not having to grind away at work is better than having to. Did you not read the subsequent paragraphs that explicitly says life has never been better not chasing money?

But I’ll accept your shite intelligence if you can keep on reading and sharing. I’ve been working about 80 hours a week this year taking care of my son full time and writing posts for you to spit on btw.

Is a matter of trust. I trust the Feds to keep our country secure and to give us a decent infrastructure, plus holding our founding father’s principles (freedom of speech, freedom of religion, etcetera). I do NOT trust them with excess money. I trust myself to make sound decisions about me and my family with any extra money.

I do respect you have the guts to express your points of view beyond a purely financial aspect. Same for Joe (Retired by 40); I used to work for his previous employer for a loooong time.

I understand why Sam has mentioned he wants to dumb things down in the future. Getting attacked by dumb readers who do not comprehend his posts must be so frustrating, especially since he spends so much time writing. There’s a great line in a movie goes like this, “are you stupid or something boy?“

Maybe intelligence really is needed to get ahead in life. I enjoy the multilayered meanings for what it’s worth.

Kevin, that comment about those of us getting hammered by the new tax plan not knowing what it means to work 50hrs a week is off base.

Nobody likes to take a hit by something they have zero control over (the tax code, for example) especially when they work really, really hard. Nobody.

Look, I took 113 flights for work last year and worked 60-80 hours every single week to make the money I made. I put my kids on the bus to school 3 days a week and ran through airports to get home in time to put my children to bed. I worked every day before my kids got up and after they went to bed. I mowed my own damn lawn! If you add up federal, FICA, state & property taxes I paid 49% of every dollar I earned this year in taxes. And, yes, I’m pissed off that because of TCJA next year I will now pay >50% of everything I make to the government. I’m pissed and I’m not going to apologize for it. .

I think that I will benefit from the new tax plan. I take the standard deduction which will increase, and 30% of my income is from my rentals which will get a 20% haircut if I understand correctly. Also a small decrease in the rate that I will pay. I think I’ll do better, really surprised.

I’m a 21 year old college student and I have a question for you. I have stocks with long term capital gains and I’m only making $30,000/year in CA. Can I sell the stocks and pay 0% capital gains and rebuy them to avoid paying capital gains later? They are S&P500 mutual fund stocks.

Not 100 percent sure about your individual taxes but in general if you sell a stock or mutual fund and want to be taxed with the lower long term capital gains rate you must wait 31 days before you buy them back, otherwise it turns into a short term capital gain. 15 percent versus 20 percent tax. I’m pretty sure your going to pay capital gains regardless of your income.

Cheer up guys. The personal tax changes are all temporary. In 10 years you can all go back to your happy life. It was really about a corporate tax cut to stimulate the economy like the Northern European countries (with the happiest people) have already done. And getting $11t of cash returned to the US by multinational corporations. Maybe they will just repurchase their stock and not tempt folks to work by creating new jobs. Its all good.

The reality is that this tax bill will most likely only survive a few years. I reserve the right to be wrong! There are mandatory cuts built in and they will have to be employed unless we can get to a 4+GDP. The second SS and Medicare are threatened with even a minor cut, the party in power will suffer. They won’t actually cut of course but just the mention of it is a political nightmare.

In the end, I don’t know how this will turn out. I know it is good for my household but we are not the average American. Again, because it passed the way it did, the bill won’t last in all likelihood. Same applies to Obamacare and how that passed. Basically the tax bill killed it by getting rid of mandatory coverage. In 19, insurers will be able to offer customized plans that don’t adhere to the ACA.

I played around with different simulations to construct what type of realistic taxpayer gains the most and loses the most under this plan (as a function of AGI.)

The household that gains the most is a ~400K married household with a large number of children (I made it 4 to be realistic) that rents in a low tax state. This household gains 6.3% of AGI under this plan. To make it more realistic if this household owned a house then the gain is around 5.3% of AGI.

The household that loses the most is a ~750K head of household (single parent) living in SF that owns a house. This household loses 3.4% of AGI. If the same person was single the loss would be around 2.9% of AGI.

Like I said before, this tax plan is a tax cut for lower and middle income taxpayers and for higher taxpayers it is shift of wealth from people depicted in “Sex in the City’ to “Leave it to Beaver.”

Appreciate the analysis, great thoughts. I think that the tax bill is interesting as it’s literally a half glass full/empty scenario. Some of it is truly needed reform (e.g. removal of certain deductions, changes to the corporate tax structure), but others like the pass through changes from what I understand are just going to lead to Kansas style problems. One’s impressions of it seem to come to one’s party registration mostly (which is a sad reflection of our polarized state unfortunately). For me personally, the most exciting changes are the 529 expansions and the removal of SALT/high deduction (ironically). As a parent, one aspect of the 529 I hated was the inflexibility, as it makes planning harder. For instance, let’s say one had 2 kids, and you save for both of them in a 529. If the eldest unexpectedly had much lower college expenses (as they get a scholarship, are fiscally careful or the future cost of college doesn’t inflate as much as expected), and the younger one was still in K-12, you couldn’t use those “extra” funds to help the younger one go to a better school or keep current costs lower. Now if we have extra in the 529 as things progress, can decide to use for a superior K-12 education. Separately, we’re looking into moving up the housing chain. The reduction of SALT and any mortgage deductions for >750k mortgages is going to kneecap to a degree the higher end pricing. At least that’s my hope. I know so many young “HENRYs” that feel priced out of the upper middle class house market, and I think that those removals will allow them to argue for a significant reduction of a house’s selling price. If you were to go buy a 1M home in MA/NJ/NY now, you have so much more leverage on price, as a lot of the deductions were factored into that original price. The reduced benefits will also finally increase pressure on state governments to control spending, particularly related to pensions, so this may lead to lower state taxes down the road ironically. At least those are my thoughts/hopes right now, time will tell :)

Great thoughts, and definitely the glass half full view point. Having more flexibility is good in the 529 plan. I just fear for those people who can’t truly in comfortably afford private school tuition, that it pushes them over the edge to seek something that may not be very beneficial long term. Private school is really about starting the grind very, very early.

I just had dinner with someone whose sister went to private school all her life and went to Stanford. After Stanford she decided to take a year off. And when she returned, she decided to just hang around and live with her parents for two years. She was burned out, and everybody truly knows that her entire grade school and college education was a sub optimal use of time and money.

I think about people at the margin. Because it is there who will be affected the most. I don’t care about the rich, who can afford everything easily. I care about the people who were so desperately aspiring to be rich and to get prestige and status. It really is not worth it.

One of the interesting aspects of this tax reform bill is the impact it can have on state income taxes. I took my 2016 return and ran a hypothetical comparison of how my 2016 income would be taxed under the new plan. My wife and I live in Oregon, with a 9% marginal state income tax rate. In 2016, after all deductions, we had a taxable income of $152k and a fed tax bill of $29.5k. Under the new plan, with the reduction of SALT exemptions, my taxable income increases to $175.4k, but with the lower tax rates and the income expansion of the child tax credit (we have one child), my federal tax bill slightly decreases by about $900. When I calculate the impact on my state income taxes, all the savings get wiped out. Oregon uses the Fed taxable income as a starting point, then makes a few adjustments from there. But because my fed taxable income is higher, I would end up paying a little more than $1k more in state income taxes. Overall, I am basically a wash under the new plan, paying slightly more overall, but there is a net transfer of my tax bill from the fed to the state.

I too live in Oregon (have my entire life), am a “HENRY”, but am totally screwed by the new plan and the great state of Oregon. I will be paying 5 digits more either way. I have run my scenario on two different calculators:

1. Move to Vancouver, WA (I work for an out of state company and travel so technically I could do this, BUT I’m an Oregonian and I don’t want to live in the “couv…)
2. Buy a sham primary residence and “act” like I moved to Vancouver, change gyms, license plates, buy a burner-phone and sleep with one eye open that Oregon doesn’t catch me
3. Stop being a “HENRY”
4. Convince my company to hire me as a 1099’er, pay the tax attorneys downtown a bucket of money to set me up as consulting company and create a ton of paperwork for others and myself. And probably still sleep with one eye open.
5. Shrug my shoulders and cycle through the stages of grief until I get to acceptance

You should do a detailed analysis (plugging in numbers into a calculator) of your 2018 tax liability before and after this tax reform plan is put through. Based on various simulations I have done I find it hard to believe anyone is going to lose 19K-23K under this plan. The sites you live above often does not take into account of the fact that under the old law a taxpayer will also have to pay AMT whereas under the new law they are unlikely to get ensnared.

The only scenarios where I found a taxpayer will end up losing the sort of amount you are talking about is someone who is single or even worse a single parent in a ultra high tax area with AGI of around 750K as well as having high real estate taxes and a very large mortgage. And even if I put such a person in OR, I found such a single tax payer would lose around 15K and not 19K-23K.

I am not saying you are not in such a situation but just that those sites might be off and the damage will be bad but perhaps not as bad as these sites indicates.

I plan to prepay before April 2018. It doesn’t hurt if you have the cash. Even if it doesn’t help, all you did was lose the interest income on 3 1/2 months worth of property tax payment. And since interest rates or nothing, there’s really nothing to lose.

I’m seeing more and more new shopping centers in the burbs and big fortune 500 companies moving away from coastal cities. So it’s possible to have your cake and eat too; that is live in a lower cost of living area with a high paying job and not fall victim to the property tax limitation it seems.

I’m surprised you didn’t mention the pass-thru deduction. There’s a lot of confusion around this but I spent a few hours on Xmas eve figuring it all out! Turned out it was a good Xmas present to myself :)

In short, every single person who owns a business will be able to take a 20% deduction on their net profit from their business as long as their total taxable income (ie biz net profit +w2 income +spouse income – std deduction -401k contrib, etc) is below the $157,500 (single)/$315,000 (married) thresholds. So that’s going to be almost everyone..

If you make more than the limits, then the type of business matters (ie service businesses are excluded). And if you are in a non-excluded business, then you have to take the lower of 1/2 of all your W2 wages paid OR the 20% deduction of your qualified business income (QBI).

I expect lots more loopholes to come out of this part of the tax code as it was so hastily put together, there’s no way they made it perfect.

That depends :-). It’s based on taxable income and of course the above referenced earnings thresholds. I haven’t seen anything that looks like an actual tax form to see if any items are excluded from the taxable income calculation- like losses or say large solo k deductions that many self employeds have.
I’ve only read anecdotal stuff

I just can not wait to see what the joykillers at the Franchise Tax Board come up with. They have 8 addresses to mail a payment to so imagine what they can do with a huge change in the code.

You’re absolutely right. Traffic is already bad in Honolulu during rush hour. But never planned to drive during rush hour, and the longest distance I need to drive will usually be 3 miles from where I wanna live vs 20 miles in the Bay Area.

I enjoyed this article and found your criticisms of the 529 plan changes and overall assessment of the new tax plan to be both fair and interesting. While I don’t think the lowering of marginal tax rates or increasing the estate tax threshold will have any noticeable impact on my behavior or desire to earn a higher income, that may very well be true for some people despite my hope that it isn’t.

I never understand why high earners aren’t outraged about paying taxes. Why can’t you see that the real problem is that taxes are just too high. Why do you have to spend your valuable time trying to find a way to pay less taxes every time there is a new tax law. If you’re taxed 50% then you gave half you’re working life to the government!!. How is it our fault that someone had 7 kids and they expect us to foot the bill because we actually worked. I never understood why high earners are so afraid of supporting someone who will say taxes are wayyyyy too high. This system will turn us into slaves one day, if all you do is follow laws.

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